Short run, I expect pressure on Mass. and other similarly situated states to pick up more of the bill for the local governments that are so exposed here. But the long run solution has to be getting personnel costs down. Government pensions were cranked up in many places as a result of a revenue bubble a couple of years ago, and now the governments are having to pay the price. Right now, government workers tend to have much better pensions than those paying them. But add to this that many government workers really don't have to work all that hard (we got into this discussion last week at volokh.com), and I suspect that you will ultimately see a lot of pressure placed on local government to fix its personnel problems.
Thins are likely not as bad in places like this. Better than a decade ago, the voters here in Colorado put a straight jacket on government spending and taxes at all levels. So, the state doesn't have the money to bail out the cities and counties, no matter how much they would like to. And that is how it should be - it is the taxpayers' money, and governments without a lot of checks on them will spend as much of it as they can.